Aged Care decisions can be complex and receiving specialist advice is crucial.
Having carefully planned finances will give you more choices and greater control.
How Can Aged Care Financial Advice Help?
Aged Care decisions can be complex and receiving specialist advice is crucial. Having carefully planned finances will give you more choices and greater control.
The aged care options available to you will depend on your family arrangements and your health requirements. By proactively planning for aged care you will have more choices and greater control over where and how you live and receive care. This is made possible through tailored aged care advice from a financial adviser who is experienced in aged care. Our advisers will help you see the bigger picture and take into consideration your family needs, estate planning considerations and strategies to generate sufficient cash flow, including access to government benefits and concessions.
Below is an example of how seeking financial advice before making any aged care decisions can assist in significantly improving your financial outcome.
Barbara is 90, widowed and enters a residential aged care facility in September 2015. Her assets comprise of the family home valued at $400,000 and $190,000 in her bank account. Barbara currently receives a Centrelink Age Pension of $854.54 per fortnight which is 97% of the maximum amount payable.
The facility requires a Refundable Accommodation Deposit (RAD) of $300,000. Barbara does not believe she has any other option except to sell her family home of 50 years to pay for the RAD. She retains the residual in her bank account.
Under this ‘sell the family home’ scenario, Barbara would be required to pay the basic daily care fee of $48.44 plus a means tested care fee of $20.47 per day. Her Centrelink Age Pension benefits would reduce to $792.04 per fortnight.
As an alternative scenario, Barbara could have used $175,000 from her bank account to pay part of the RAD and the remaining $125,000 as an ongoing Daily Accommodation Payment (DAP) of $19.73 per day. The family home could then be kept and rented out to meet the ongoing DAP liability in the aged care facility. If cash flow was a concern, Barbara could also elect to have the ongoing DAP deducted from the RAD.
This scenario of keeping the family home would reduce Barbara’s means tested care fee to $9.34 per day, an annual saving of $4,062 on the means tested care fee when compared with the “sell the family home” scenario. Whilst Barbara would be entitled to a slightly lower Centrelink Age Pension of $761.73 per fortnight, she would also be receiving rental income.
This example demonstrates that while some decisions may seem obvious, with specialist advice there may be other options which will strengthen your financial position in the coming years.
DISCLAIMER: The information contained in this example is general in nature and is based on rates and thresholds current as at 1 January 2017. The application of the information in this document will depend on your personal circumstances. We recommend you consult a financial adviser whose advice will take into account your particular investment objectives, financial situation and individual needs.